--- title: A chartered accountant faced a decade-old bribery allegation. The Institute closed the case without testing it. description: A chartered accountant, also an insurance surveyor, was accused of a bribe in 2007. Eleven years later, the Board closed the case under a Rule 12 time bar without deciding whether it happened. case_number: BOD 702/2023 file_number: PPR/G/35/2018/DD/46/INF/2019/BOD/702/2023 forum: board-of-discipline institute: icai decided_on: 2024-05-07 outcome: Not guilty clauses: Item (2) of Part IV of the First Schedule order_pdf: https://disc.icai.org/wp-content/uploads/2024/05/11.-BOD-702-2023.pdf published: 2026-09-09 author: Jainam Shah keywords: bod 702 2023, rule 12 time bar, item 2 part iv first schedule, conduct bringing disrepute, insurance surveyor bribery, information based case, board of discipline not guilty source: /icai/board-of-discipline/bod-702-2023 --- # A chartered accountant faced a decade-old bribery allegation. The Institute closed the case without testing it. A chartered accountant who also worked as an insurance surveyor was accused, in 2007, of joining an insurance official in demanding a bribe from a policyholder to settle a fire-insurance claim.[^parties] That accusation reached the Institute of Chartered Accountants of India only eleven years later, through a letter written for an entirely different inquiry. ## What happened ```timeline A chartered accountant works as a surveyor for an insurance company. In that role he is accused, alongside the company's divisional manager, of demanding a large sum from a policyholder to settle a fire-insurance claim. The policyholder complains to the CBI, which registers a case and raids the men, catching the accountant, the divisional manager and a third man together. The investigation ends in a formal charge sheet naming the accountant as the second accused, filed before a special judge. More than a decade passes with no reference to the Institute. Then a CBI letter to the Ministry of Corporate Affairs, written for an unrelated inquiry into shell companies, mentions the accountant. The Ministry forwards it to the Institute's Disciplinary Directorate, which opens a case on the strength of it. The Directorate writes to the CBI more than once asking for further material and never receives a reply. It proceeds anyway, relying only on the old charge sheet. By now the accountant has appealed his conviction to the High Court, which has stayed both the proceedings and the sentence. The Board looks at how long the matter took to reach it, measured from the original allegation. It finds the delay longer than a Rule 12 time limit allows, closes the case without going into the facts, and holds the accountant not guilty. ``` Two things in the record do not fit inside that sequence. The first is where the information came from. The CBI's letter to the Ministry of Corporate Affairs, and the Ministry's own letter forwarding it to the Institute, both concerned a task force set up to look into shell companies. Neither letter connected the Respondent to shell companies at all — the link to the 2007 bribery matter was one the Disciplinary Directorate drew on its own (paras 4.1–4.2). The second is what happened after that. The Directorate wrote to the CBI more than once asking for additional information and documents, and sent reminder letters when nothing came. It never received them, and went ahead regardless, forming its opinion on the 2007 charge sheet alone (para 4.4). ## The charge - **Item (2) of Part IV of the First Schedule** — conduct that, in the Council's opinion, brings disrepute to the profession or the Institute, whether or not it has anything to do with the member's professional work.[^clause] It is the clause used to bring an allegation from outside practice within the Council's reach. The Directorate's case rested on two facts: that a CBI charge sheet from 2007 named the Respondent as the second accused in a bribery prosecution, and that he and an insurance company's divisional manager had demanded ₹1.5 lakh from a policyholder to settle a fire-insurance claim (paras 2.1–2.2). The Board never ruled on either fact. It held the Respondent not guilty of the clause without deciding whether the bribe was demanded at all. ## What the respondent said He answered on three fronts. On why the case existed at all, his argument was that it had nothing to do with what the information was collected for. The CBI's letter and the Ministry's forwarding letter both said the information concerned the shell-companies task force; nothing in either connected him to shell companies. The Disciplinary Directorate had drawn the connection to the old bribery matter on its own, and even after that kept writing to the CBI for more material — without ever getting a reply (paras 4.1–4.4). On timing, his case was that the matter had come too late. The alleged misconduct was from 2007; the Institute received no information about it until 2018 — eleven years later, four more than the seven years he said Rule 12 allows (paras 4.5–4.6). And he pointed to the parallel criminal case. He had appealed his conviction to the Punjab and Haryana High Court, which had accepted the appeal on merits and stayed both the proceedings and the sentence. Taking disciplinary action while that appeal was pending, he argued, could be justified only if the Institute had evidence beyond what the criminal court already had before it — and here it had none (paras 4.7–4.9). ## What the Board held The Board did not take up any of the three arguments individually.[^coram] It went straight to the calendar: > the Board decided to invoke Rule 12 of the Chartered Accountants (Procedure for Investigations of > Professionals and Other Misconduct and Conduct of Cases) Rules 2007 and to close this matter > without going into the merits of the case and the Respondent is held 'Not Guilty' of the charges > alleged (para 5) The delay it measured was the same eleven years the Respondent himself had already put on record — "a considerable time of more than 11 years" from the 2007 allegation and from the Institute's receipt of the information (para 5).[^rule12] The Board did not comment on the shell-companies argument, and it did not comment on the pending appeal. ## The order > in the considered opinion of the Board, the Respondent is 'NOT GUILTY' of Other Misconduct > falling within the meaning of Item (2) of Part IV of the First Schedule to the Chartered > Accountants Act, 1949 read with section 22 of the said Act. Accordingly, the Board passed an > Order for closure of the case in terms of the provisions of Rule 15 (2)… (para 6) A not-guilty finding under Rule 15(2) ends the matter at the Board of Discipline itself — there is no punishment stage to follow, because there is no finding of guilt to punish.[^forum] Between the alleged 2007 bribe and this closure lay seventeen years. ## Why it matters *This section is ours, not the Board's.* **A time bar can close a case without a verdict on the facts.** Rule 12 gave the Institute seven years, by the Respondent's own account, to act on information about a member; eleven had passed. If an old allegation resurfaces against you, check when the underlying information first reached the Institute — not only when the incident happened. **Information gathered for one inquiry can be used to open another.** The letters that reached the Institute here said they concerned an unrelated inquiry into shell companies. Read what a forwarded document says its own purpose is — it will not stop a regulator from putting it to a different one. **Silence from a source does not stall a case.** The Disciplinary Directorate wrote to the CBI more than once for further material, got nothing back, and proceeded on the record it already had. Do not assume an inquiry stalls just because the evidence you expect never arrives. This summarises a public order and links the primary source. It is general information, not legal or professional advice. [^parties]: The Respondent was *CA. Rajesh Nakra (M. No. 084325)*, of Ludhiana, described in the findings as the then Surveyor of the insurance company involved. The insurance official named alongside him was *Shri A.L. Chawla, Divisional Manager, National Insurance Company Limited, Ludhiana*; the policyholder who complained to the CBI was *Shri Naresh Dhall, Proprietor, M/s. Shally Collections, Ludhiana*; a third man caught in the same raid was *Shri Rajinder Kochhar*. None of the three is a chartered accountant party to this order. [^clause]: Item (2) of Part IV of the First Schedule is the "other misconduct" clause — conduct that, in the Council's opinion, brings disrepute to the profession or the Institute, whether or not it arises from the member's professional work. [^rule12]: Rule 12 of the Chartered Accountants (Procedure for Investigations of Professionals and Other Misconduct and Conduct of Cases) Rules 2007 sets a time limit within which information about a member's conduct must reach the Institute. The seven-year figure comes from the Respondent's own submission (para 4.6); the Board's order does not restate the number, only that it invoked the rule to close the case on delay. [^forum]: First Schedule matters go to the Board of Discipline; Second Schedule matters, and matters falling under both, go to the Disciplinary Committee. The two carry very different punishment ceilings. [^coram]: The findings were signed by CA. Rajendra Kumar P (Presiding Officer), Ms. Dolly Chakrabarty (Government Nominee) and CA. Priti Savla (Member). A hearing on 23 August 2023 was adjourned at the Respondent's request; the matter was heard and concluded at a final hearing on 4 April 2024 at Amritsar; the findings are dated 7 May 2024.